You know the drill... You can refer back to chapters 10 & 11 for a format for this wiki page.

The Accounts Payable/Cash Disbursement (AP/CD) Process: This chapter examines the AP/CD processs, systems and controls that should be in place to ensure that the AP/CD process operates efficiently and effectively. It also examines the specific process control procedures that help ensure all accounts payable are paid in a tiemly fashion.

Accounts Payable/Cash Disbursement Process Activities:

• Invoice received from vendor
• Approved voucher sent to cashier
• AP notification sent to general ledger process
• Check sent from cashier to vendor
• Paid voucher returned to the AP department
• Notification of the cash disbursement sent from the cashier to the general ledger process

Technologies Supporting AP/CD Process:

EDI:
Significant cost savings
Increasing trend is to require vendors to use EDI
Several alternatives deployed but have not replaced EDI
Web Based payment Plans

AP/CD Fraud:

AP Fraud: Usually involves fictitious vendors and false invoices.
- a dishonest employee who has access to the vendor file and authorizes payment
- may embezzle amounts refunded by vendors
- human error is still a leading cause of loss

Fraudsters often set up fictious vendors in order to pay themselves.

CD Fraud: less sophisticated
- Usually involves check fraud
- Check fraud takes many forms from stealing and passing stolen checks to changing amounts on legitimate checks or check forgery
- becoming easier and more common with computer duplication technology

One way to combat these schemes is to use a data analysis to analyze company information with a proactive eye towards detecting fraud.

Here are some steps that can be used in data analysis:

1. === ===Review payments to vendors with blank information - Phony vendor accounts can be easily spotted through a review of blank information in fields such as the tax ID or phone number. Also, fields that have all 9s, 0s, or 1s should be suspect.
2. Extract all round-dollar payments - Fraudsters may not be creative enough to put pennies to their fraudulent payments. While there may be many valid reasons for round-dollar payments, review them carefully for their validity.
3. Duplicate payments - Similar to round payments, people committing fraud may not be clever enough to make different payment amounts or even different invoice numbers.
4. Match the vendor address to the employee address file - This is the classic test to identify vendor payments made to employee addresses. Although this report may just represent travel and entertainment expenses paid to an employee, question any results if you have analyzed all other payables activity.

Exposure to Loss and Destruction of Resources:

Additional sources of loss or destruction are unintentional mistakes and inadvertent errors. These can happen by:
- Making payments for incorrect or larger amounts
- Paying the wrong vendor
- Paying the same invoice twice

Control Plans for AP/CD processes (Non-EDI)

- Mark paper invoice and set flag on computerized AP record to avoid dulpicate payment;
- Safeguard blank checks;
- More than one authorized signature on large dollar checks;
- Limit time when checks can be cashed;
- Use check-protection machine for writing checks.